Economic OutlOOk 2014-15 · Economic OutlOOk 2014-15 ... The territory’s existing mining operations—which include a tungsten mine, ... other factors favouring improved economic

Economic OutlOOk2014-15

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TABLED DOCUMENT 108-17(5) TABLED ON JUNE 5, 2014

Investment and economIc analysIs

iTi - Industry Tourism and InvestmentEoS - Economic Opportunities StrategyBDic - Business Development Investment CorporationnWT - Northwest TerritoriesGnWT - Government of the Northwest TerritoriesoEcD - Organization for Economic Cooperation and DevelopmentGDP - Gross Domestic ProductReal numbers - Adjusted for price changesTerritories - Yukon, NWT and Nunavutchained GDP - Removes the impact of price changes on production value over time. Like return on investment, chained GDP strips away inflation to provide a real rate of return. All “chained” numbers provided are in 2007 dollars.

Acronyms And AbbreviAtions

minister’s message iv

Economic outlook vi

nWT in canada 8

Economic Highlights 9

Population 10

Employment 11

Defining GDP 12

GDP by Expenditure 13

GDP by income 14

Projected GDP change by industry 15

Real GDP 16

Exports and Trade 18

investment by industry 19

major Project investments 20

imports 21

World markets 22

canadian markets 24

industry overview 25

Bill Braden

contents

iii

A fourth diamond mine, Gahcho Kué, has been approved for development, and gold exploration has seen an up-turn in recent years. This recovery comes in light of declining production at our current diamond mines and at the norman Wells oilfield, which slowed growth in the past five years. despite this, significant commitments to needed infrastructure have opened the door to improving that state. The inuvik-tuktoyaktuk Highway will open new access to the beaufort sea and Arctic ocean’s petroleum resources, and the recent completion of the deh cho bridge eliminated a major supply bottleneck in the north slave region, with expected positive impacts on retail and wholesale trade.

minister’s messAGe

mineral investment is at the forefront of economic growth for the northwest territories, with significant exploration interest brewing in the sahtu, beaufort and Fort Liard regions.

nWT REGionS■ Beaufort Delta Region■ Sahtu Region■ Dehcho Region■ North Slave Region■ South Slave Region

iv

tourism has shown renewed growth, especially from east Asia. over the past winter, we received a record number of visitors from Japan and china, with that amount expected to grow as our territory continues to market itself as a prime Aurora viewing destination. recent completion of the economic opportunities strategy provides us with a blueprint for economic growth for the next decade, as we continue to work with our partners on an implementation strategy to bring its recommendations to fruition.

Honourable David Ramsay Minister of Industry, tourism and Investment Government of the Northwest territories

in general, the nWT economy will go through a few years of limited growth, followed by a period of strong performance, stimulated by the development of De Beers’ Gahcho Kué mine and new metal mines. As

noted by the conference Board of canada, the nWT’s moderate and stable growth forecast masks some underlying changes in the territory’s economy.

The territory’s existing mining operations—which include a tungsten mine, three diamond mines, and oil-producing fields—have long passed peak production and will see lower levels of output as projects draw nearer to their end, putting downward pressure on bottom-line GDP growth. However, a new diamond mine and three new metal mines are expected to begin operations this decade. Energy companies are in the early stages of potentially unlocking the Canol shale oil play. And the territorial government, armed with the powers given it under the latest phase of devolution, will have more financial resources with which to address the needs of the NWT and its people.

But over the next five years, employment is expected to grow by almost 2,400 workers. And with new mines advancing through the construction phase and starting production, and the government investing in new infrastructure, real GDP growth will improve. From 2016 through 2019, the territorial economy is forecast to grow at an average pace of just over seven per cent per year. The robust economic prospects, combined with the devolution of control over natural resources from the federal to the territorial government (as of April 1, 2014), will result in a long string of budget surpluses for the territory. (Conference Board forecast spring 2014)

economic outLooK

vi

other factors favouring improved economic performance include:

•Positive world economic climate will have positive impacts on nWT investment, commodity prices and tourism

•Low interest monetary policy in canada will benefit the nWT through a lower dollar and lower capital costs

•new mining projects will invigorate the nWT economy, creating new labour demand as well as in-migration

•Devolution is a game changer and will become the major factor in attracting new investment

The nWT and canada need to address challenges in infrastructure, labour availability, an aging workforce, high cost of living, high freight costs and reliance on worker tourists.

vii

nWt in cAnAdA

Map by Dan Westman

• The NWT has the highest per capita GDP in North America

• The NWT is the world’s third largest diamond producer by value

• Yellowknife is on a similar longitude to Los Angeles; Inuvik is further west than Victoria

• July temperatures in Yellowknife are similar to Edmonton or Vancouver

• Hay River is the most northern rail head in North America

• The NWT has 2,200 kilometres of all-weather roads and 2,100 kilometres of ice roads

• The series premiere of Ice Road Truckers, filmed in the NWT, was seen by 3.4 million viewers to become the most-watched original telecast in the History Channel’s 12-year history

• Yellowknife is closer to Beijing than Vancouver and closer to Frankfurt than Toronto

Interesting FACTS

8

Key Economic Changes Between 2007 and 2012Population - The population had zero growth between 2007 and 2012. However, the population is aging; with 10 per cent growth in the over 45 age group. There was little change in urbanization.

Business Indicators - Despite limited population growth, retail trade continued to show strength. Wholesale trade also grew, largely in response to new investment. While overall tourism sales remained static, there was significant growth (58 per cent) in Aurora tourism spending as visitation numbers have reached new record highs.

0% + 10% - 6% + 3%% Change in

NWT Population

% Change in Over 45 Years

Elders

% Change in Under 15 Years

Youth

% Change Small Community

Population

Population over the past five years

+ 17% + 9% - 3% + 58%Retail Trade Wholesale

TradeTotal Tourism

SpendingAurora Tourism

Spending

Business indicators over the past five years

economic HiGHLiGHts

Source: Shutterstock

9

Population

Net Inter-provincial Migration Since 2006

Between 1999 and 2013 the NWT population increased by seven per cent with most growth occurring between 2000 and 2004. Since 2004, population growth has been the lowest in Western Canada.

The NWT has lost 2,916 residents to migration since 2006, a majority of these people to Alberta.

PoPuLAtion

Source: Statistics Canada CanSiM Table 051-0001 Estimates of population

Source: nWT Bureau of Statistics

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2006 2007 2008 2009 2010 2011 2012 2013

44000

43000

42000

41000

40000

39000

0

-100

-200

-300

-400

-500

-600

-700

-800

10

2007 2008 2009 2010 2011 2012

Resident Employment (Thousands)

In 2012, an estimated 27,905 workers were employed. By comparison, the number of residents who reported being employed over the same year was significantly lower at 22,700. While a number of people hold two jobs, there is a gap of 5,200 between the number of jobs and residents employed.

Non Resident Workers

The Conference Board of Canada predicts resident employment should reach 25,000 by 2018. Employment will be driven by the development of the new Gahcho Kué diamond mine and new metal mines.

FoRECAST25,000

Resident employment by 2018

emPLoyment

Source: Statistics Canada CanSiM Table 282-0055 and Conference Board of Canada

‘000

‘000

Source: Statistics Canada CanSiM Table 282-0055

2010 2011 2012 2013 2014 2015 2016 2017 2018

26.0

25.0

24.0

23.0

22.0

21.0

20.0

19.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

Conference Board Forecast

■ Total number of jobs ■ Residents employed

11

deFininG GdP

GDP - A Measure of Income, Spending and IndustryGross domestic product (GDP) is one of the primary indicators used to gauge economic health. It can be measured in three ways, with each method providing different insights into economic performance:

By Expenditure - The most common method of measuring GDP is by expenditure. This approach adds all expenditures made on final goods and services in a single year, including household expenditures, investment, government expenditures, and net exports. This also includes an estimate for exports and imports.

By Income - Another way to measure GDP is to add up total income earned in the NWT. This includes compensation of employees, gross operating surplus (profits), gross mixed income plus taxes. The total is then adjusted for taxes less subsidies on production and imports.

By Industry - This measure provides information for current economic analysis from an industry point of view. It provides an alternate measure of total economic activity by industry and provides a supplement to the income and expenditure-based estimates. GDP by industry is normally measured in “basic prices” which are adjusted for price changes. The most recent estimates are adjusted to 2007 prices.

Source: Diavik Diamond Mines

12

GdP by exPenditure

GDP By Expenditure - Percentage

The two charts plot the distribution of GDP by expenditure in 2007 and 2012; detailed information can be found in the table below. over the five years, the major change was in gross fixed capital formation (investment), which declined from $2 billion to $1.3 billion, and government expenditures, which increased from $1.5 billion in 2007 to $2 billion in 2012.

Estimates 2007 2008 2009 2010 2011 2012Household consumption 1,264 1,325 1,330 1,370 1,434 1,484Governments expenditure 1,535 1,627 1,762 1,865 1,957 2,006Gross fixed capital formation 1,976 1,644 1,154 1,253 1,091 1,316Exports of goods and services 3,131 3,582 2,686 3,324 3,404 3,058Less: imports of goods and services 3,208 3,190 2,984 3,166 3,284 3,426Other ‐61 27 72 141 116 237Gross domestic product at market prices 4,637 5,015 4,020 4,787 4,718 4,675

GDP by Expenditure Market Value ($ Millions)

Source: Statistics Canada CanSiM - Table 384-0038 Gross domestic product, expenditure-based, provincial and territorial, annual (dollars x 1,000,000).

20122007

13

■ Household ■ Government ■ Investment

27%

41%

32%

31%

42%

27%

GdP by income

GDP By Income - Percentage

The two charts plot the distribution of GDP by income source in 2007 and 2012; detailed information can be found in the table below. over these five years, the net surplus of corporations (a proxy for profits) has shrunk from 47 per cent of GDP to 41 per cent. At the same time, compensation to employees (largely wages and salaries) increased from 43 per cent to 47 per cent of GDP. Part of this increase in wages is associated with growth in public employment.

GDP by Income Source - Market Value ($ Millions)

Source: Statistics Canada CanSiM - Table 384-0037 Gross domestic product, income-based, provincial and territorial, annual (dollars x 1,000,000)

■ Employees ■ operating surplus ■ other

10% 12%

43% 47%

47% 41%

Estimates 2007 2008 2009 2010 2011

Compensation of employees 1,981 2,057 1,943 2,007 2,109

Gross operating surplus 2,173 2,475 1,593 2,277 2,060

Gross mixed income 265 274 288 298 319

Taxes less subsidies on production 70 72 79 82 86

Taxes less subsidies on products and imports 125 115 104 114 131

Statistical discrepancy 23 22 13 9 13

Gross domestic product at market prices 4,637 5,015 4,020 4,787 4,718

20122007

14

The two charts plot the distribution of GDP by industry in 2012 and 2018; more detailed information can be found in the table below. over this period, the Conference Board of Canada predicts significant growth in mining, and industries which support mining development, such as trade.

Projected GDP Growth 2012 to 2018 ($ Millions)

Source: Statistics Canada CanSiM - Table 379-0028 and Conference Board of Canada

ProJected GdP cHAnGe by industry

GRoSS DoMESTIC PRoDUCT AT BASIC PRICES BY INDUSTRY ($2007; MILLIoNS)

2012 2013 2014 2015 2016 2017 2018

GDP 3,470 3,529 3,589 3,657 3,879 4,358 4,548

Mining 1,006 1,015 969 972 1,128 1,568 1,747

Construction 188 202 245 262 270 236 206

Transportation 240 239 244 252 265 285 292

Trade 294 283 292 302 322 353 365

Finance & Real Estate 448 459 469 477 487 496 505

Educational Services 178 183 187 188 190 191 192

Health/Social Assistance 236 244 250 253 256 259 262

Public Administration 540 552 569 580 583 583 584

other 341 352 363 371 378 386 393

GDP By Industry - Percentage

■ Mining■ Construction■ Transportation

■ Trade■ Finance & Real Estate■ Educational Services

■ Health/Social Assistance■ Public Administration■ other

29%

5%

7%5%

7%

16%

10%

8%13%

2012

9%

38%

5%

6%

4%

6%

13%

8%

11%

2018

15

Aging mines and a closure of the Enbridge pipeline due to a spill significantly reduced oil exports in 2011. Production fell from 955 thousand cubic meters in 2010 to 680 thousand cubic meters in 2011.

Declines in mineral, oil and natural gas prices have a negative impact on growth - mines close for four or more months during economic downturn.

$4.1BilliONiN 2008

$3.7BilliONiN 2010

With the development of new mines, infrastructure, tourism and renewed interest in oil and gas, the nWT is set to return to record growth by 2017.

reAL GdP(2007 doLLArs)

$3.5BilliONiN 2012

16

Increased investment in infrastructure and mining projects - especially Gahcho Kué and the Tuktoyaktuk - Inuvik Highway. Mineral investment in the NWT hits new record highs.

Production from the Gahcho Kué mine starts to positively impact exports and economic growth.

New metal mines come into production, further boosting exports and economic growth.

$3.9BilliONiN 2016

$4.4BilliONiN 2018

$3.6BilliONiN 2014

economy Hits neW HiGHs by 2018

17

exPorts And trAde

The NWT economy has always depended on trade; starting with the fur trade. Today per capita exports are $71,000 per year; by far the highest in Canada where the national average is $26,000.

overall, NWT exports are three times that of the Yukon or Nunavut. Diamonds are the major NWT export, followed by oil and tourism. Diamonds add almost $2 billion to Canada’s trade surplus.

oil from Norman Wells, one of Canada’s largest conventional oil fields, is mainly exported to the United States through the Alberta pipeline grid.

Exports from the NWT declined during the world economic downturn, but have since recovered. Future exports are projected to increase to a record $4 billion by 2016.

NWT and Territorial Exports ($ Millions)

Displacing imports provides significant opportunities for NWT businesses. For example, heating fuel can be replaced with local biomass or local natural gas. Since total imports exceed $300 million, this is an opportunity worth investigating.

Another significant import is mining services. In 2010, over $288 million in mineral support services were imported. By comparison, the Yukon imported $8 million in mining support services.

Another opportunity is professional services; $252 million in professional services were imported from other regions of Canada. This includes consultants, accountants, engineers, and dentists. Attracting these services to the NWT would add significant sales and employment to the economy.

NWT Imports from Provinces ($ Millions)

Source: Statistics Canada CanSiM Table 386-0003 Provincial input-output tables


■ Yukon ■ Northwest Territories

■ Nunavut2010 2011 2012 2013 2014 2015

4000

3000

2000

1000

0

350

300

250

200

150

100

50

0

317

288

252

144

116 11592

Petroleum Products

Mineral Support Service

s

Professional S

ervices

Wholesale Margins

Transp

ortatio

n

Management Service

s

Food and Beverages

18

investment by industry

Investment and Repair Expenditures

Industry 2008 2009 2010 2011 2012 Growth

Total Capital and Repair 1808 1420 1578 1523 1689 ‐119Mining/oil/natural gas 1110 723 x 821 1022 ‐88Utilities 33 28 41 50 61 28Construction 112 26 43 27 35 ‐77Wholesale 14 5 6 8 ‐6Retail 12 22 14 17 20 9Transportation 164 186 99 88 132 ‐32Real estate and rental 33 40 43 13 ‐20Professional 5 4 9 6 3 ‐2Other Services 3 2 8 13 5 3Public Admin 180 209 296 255 231 51Housing 71 78 94 88 85 14x ‐ data suppressed by Statistics Canada

$ millions

Shutterstock

Investment is a measure of confidence in the economy. If businesses see future growth and opportunity, they will invest in new plants and equipment. overall investment has declined seven per cent over five years, but is expected to recover with the development of the Gahcho Kué mine, new metal mines and new investment in public infrastructure.

FACT$38,800Per Capita Investment

2012


19

mAJor ProJect investments

over the next decade a number of projects are planned for the NWT. Together these projects represent over $4.5 billion in new investment.

FACT

$4.5 billion in future planned

investment

Major Projects in Advanced Planning or Developmentover the next decade a number of projects are planned for the NWT. Together these projects represent more than $4.5 billion in new investment.

1. Gahcho Kué (De Beer’s and Mountain Province Diamonds) $650 million

2. Development of the Jay Pipe (Dominion Diamonds Ekati Mine) $500 + million

3. Nechalacho mine site investment (Avalon Rare Metals) $550 million

4. NICo (Fortune Minerals) $226 million

5. Prairie Creek (Canada Zinc) $195 million

6. oil and Gas offshore in excess of $2 billion

7. Sahtu oil and Gas - $45 million per well

8. Inuvik – Tuktoyaktuk Highway $220 – $260 million

9. Fibre optic link from Inuvik to the North American Grid $60 million

20

Information on trade between provinces is available from input/output tables. These are developed periodically by Statistics Canada; the latest year available being 2009.

The NWT represents a major market for Alberta, ontario and Quebec. Imports from Alberta were $680 million, followed by ontario at $624 million and Quebec at $336 million. NWT trade is also important to British Columbia ($307 million).

These numbers exclude wages earned by provincial residents working in the NWT, which represent another $500 million in imports, mainly from Alberta.

With a significant number of new investments planned for the NWT, there will be significant benefits to southern Canada. Planned new capital investment for 2013 was estimated at $1.1 billion.

Source: Statistics Canada CanSiM Table 386-0003 Provincial input-output tables

Imports into the NWT By Province ($ Millions)

$2.2BilliON

impORtEd fROm All pROviNcEs

$680milliON

impORtEd fROm AlBERtA

$624milliON

impORtEd fROm ONtARiO

imPorts

■ Provincial Inputs 2009

800

700

600

500

400

300

200

100

016

33 27

336

624

77

37

680

307

52

New

foundland & Labrador

Nova Scotia

New

Brunswick

Quebec

ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon

21

World Markets and Demand for NWT Goods and ServicesThe NWT’s future growth cannot be assessed in isolation. Almost all NWT exports, including tourism, depend on foreign sales. NWT diamonds are exported to Europe, and from there to factories and stores around the world. Canadian fiscal and monetary policy can have a significant impact on capital and profits. Investments in the NWT are often large; per capita investment averages almost $30,000. The organization on Economic Cooperation and Development (oECD) maintains a database of world economic trends. Falling unemployment rates in the US, Japan and the UK bodes well for consumer confidence and the growing demand for goods. This will have a positive impact on commodity prices and spending on “luxury goods” like aurora vacations, furs, diamonds, and gold – commodities that are exported from the NWT.

WorLd mArKets

Unemployment Trends in Key Industrial Nations

Source: OECD

3

4

5

6

7

8

9

10

11

12

13

Jan/12

Apr/12

Jul/12

Oct/12

Jan/13

Apr/13

Jul/13

Oct/13

Jan/14

Japan United States Euro area United Kingdom

NWT Economy

Canadian EconomyWorld

EconomyNWT

Investment

22

-4

-2

0

2

4

6

8

10

-4

-2

0

2

4

6

8

10

Mar/11

Jun/11

Sep/11

Dec/11

Mar/12

Jun/12

Sep/12

Dec/12

Mar/13

Jun/13

Sep/13

Dec/13

Average growth 2000-2007

World Trade Volumes - Percentage Change

Finally, another positive indicator for the NWT economy is growing world trade volumes. Recent oECD projections indicate strong growth in world trade volumes after years of sluggish growth. This should stimulate higher commodity demand leading to new resource investment in the NWT.

Source: OECD

Shutterstock 23

Canadian Impacts on the NWT EconomyExport economies like the NWT, with high levels of capitalization, benefit from a lower dollar and lower interest rates. Most analysts predict overnight interest rates will remain at one per cent through 2014, and increase to 1.75 per cent in 2015.

Growth in other provinces impacts the NWT’s ability to attract labour. High growth in Alberta is a draw for NWT residents and workers and makes it more difficult to attract migrants.

Major banks including the Royal Bank of Canada and the Toronto Dominion Bank, are predicting that the Alberta economy will continue to benefit from massive resource investment. over the coming years, Alberta’s population growth is expected to be the highest in 30 years.

-1200

-1000

-800

-600

-400

-200

0

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

2012/2013

Net Migration from the NWT to Alberta

Source: T D Bank and nWT Bureau of Statistics

Alberta economy hits 9-10 percent annual economic growth

When the Alberta economy started to reach record levels of growth in 2009/2010, the NWT started to experience negative net migration. In 2010, 2011 and 2012 – Alberta’s economy grew nine per cent, 10 per cent and five per cent respectively. The NWT’s annual net loss of residents to migration grew from 179 to 743 residents a year.

Alberta and Saskatchewan’s record growth is also making it more difficult to attract workers from other regions of Canada. The NWT is in direct competition with these jurisdictions for skilled labour.

cAnAdiAn mArKets

24

industry overvieW

Accommodation and Food Services 26

Agriculture 27

Arts, Entertainment and Recreation 28

construction 30

Education Services 32

Finance, Real Estate and insurance 33

Fisheries 34

Fur 36

Health care and Social Services 38

information and culture 39

mining 41

oil and Gas 44

Professional and Technical Services 47

Public Administration and Defence 48

Retail Trade 49

Tourism 50

Transportation and Warehousing 52

Wholesale Trade 54

25

This sector comprises establishments primarily providing short-term lodging and complementary services to travellers, vacationers and others, in facilities such as hotels, resorts, motels, bed and breakfast accommodations, housekeeping cottages and cabins, recreational vehicle parks and campgrounds, hunting and fishing camps, and various types of recreational and adventure camps. This sector also comprises establishments primarily engaged in preparing meals, snacks and beverages to customer orders for immediate consumption on and off the premises.

Conference Board Forecast The Conference Board of Canada forecasts that accommodations and food services will increase by eight per cent between 2013 and 2018. This industry has upside potential with growth in tourism and business travel growth.

AccommodAtion & Food services

Accommodation and Food Services - Contribution to GDP

Accommodation and Food Services - Percentage of GDP


$ Millions (2007 chained dollars)

2012GdP

Accommodation and food services accounts for around two per cent of the NWT’s GDP and is projected to increase from $63 million to $69 million. The industry could be positively impacted by increased tourism or investment.

■■ Accommodation and Food ServicesSource: nWT Bureau of Statistics

2008 2009 2010 2011 2012 2013

90.0

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0

26

Agriculture - Quality Local Food at Reasonable CostAgriculture in the NWT is a small but emerging sector of the economy. Motivated by high food costs, positive contributions to lifestyles, local product diversity, and increased awareness of nutritional values, participation in local food production is increasing in most, if not all, communities in the NWT. Ranging from small community gardens to commercial greenhouses, regulated egg production and harvesting of “wild” edibles, the local food production sector has grown dramatically over the past decade. The agriculture sector generates approximately $8-10 million in income per annum in the NWT. The industry can be divided into three categories:

• Smallscaleproduction

• Commercialagriculture

• Commercialharvesting

Small Scale Community ProducersCommunity and market gardens are best characterized as small commercial-oriented operations. These gardens often reduce reliance on imported foods in a community and/or region. Gardens operate on a seasonal basis and plot sizes range from approximately ¼ acre to 10 acres.

Commercial AgricultureCommercial agriculture is currently limited to the production of eggs. Plans are under way to expand agriculture through the development of a new agriculture strategy. The marketing of eggs in Canada has been regulated under the Federal Agricultural Products Marketing Act since 1973. The NWT formally entered the regulated egg marketing industry on March 25, 1999.

As of october 2013, a federally certified grading station is operational in Hay River. NWT producers marketed just over three million dozen eggs in 2013 from this facility. Eggs produced in Hay River can now be found on grocery shelves throughout the NWT.

Commercial HarvestingHarvesting of natural resources in the NWT extends well beyond fish, caribou, bison and muskox. Mushrooms, berries, syrup, herbs and plants for medicinal purposes are only a few of the many examples of food products available in abundance throughout the NWT for either local consumption, or for commercial trade.

Muskox The muskox harvest on Banks Island provides an important source of income and employment to residents in the community of Sachs Harbour. The harvest produces several thousand pounds of meat and qiviut; a highly prized fibre used in knitting and weaving.

AGricuLture

Spruce Tip Seasoning / iTi

27

The arts, entertainment and recreation industry contributes seven million dollars to GDP in the NWT.

This sector comprises establishments primarily engaged in operating facilities or providing services to meet the cultural interests of their patrons. These establishments produce, promote or participate in live performances, events or exhibits intended for public viewing. They provide the artistic, creative and technical skills necessary for the production of artistic products and live performances, as well as preserve and exhibit objects and sites of historical, cultural or educational interest.

Conference Board Forecast According to the Conference Board of Canada, the arts, entertainment and recreation industry is expected to grow by seven per cent between 2013 and 2018.

Currently, the arts, entertainment and recreation industry accounts for less than one per cent of the NWT’s GDP, but is an important source of income for many households in the territory. The industry also holds significant importance for culture preservation.

Arts, entertAinment And recreAtion

Arts, Entertainment and Recreation - Contribution to GDP


Arts, Entertainment and Recreation - Percentage of GDP

6.7

6.8

6.9

7.0

7.1

7.2

7.3

7.4

7.5

7.6

2008 2009 2010 2011 2012 2013


2013GdP

■■ arts, Entertainment and RecreationSource: nWT Bureau of Statistics

28

Top: Bottom: Dene Cultural institute Hay River / Dan WestmanBottom Left: Shopping for nWT art / Bill BradenBottom right: Shutterstock

29

construction

This sector comprises establishments primarily engaged in constructing, repairing and renovating buildings and engineering works, and in subdividing and developing land. These establishments may operate on their own account or under contract to other establishments or property owners. They may produce complete projects or just parts of projects. Establishments may produce new construction, or undertake repairs and renovations to existing structures.

Forecast Between 2013 and 2018 the industry will experience a period of rapid growth paralleling new mine development. As these projects end, the industry is expected to return to 2011 - 2012 levels.

Construction - Contribution to GDP

Construction - Percentage of GDP

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

2008 2009 2010 2011 2012 2013



Currently, construction accounts for seven per cent of the NWT’s GDP, and is critical for the development of infrastructure supporting the development of other industries.

■■ ConstructionSource: nWT Bureau of Statistics

2013GdP

30

Shutterstock

31

Education services constitute over six per cent of the NWT’s GDP. While the sector’s contribution is growing, its relative share of the economy is expected to remain around six per cent.

This sector comprises establishments primarily engaged in providing instruction and training in a wide variety of subjects. This instruction and training is provided by specialized establishments, such as schools, colleges, universities and training centres. These establishments may be privately owned and operated, either for profit or not, or they may be publicly owned and operated. They may also offer food and accommodation services to their students.

Conference Board Forecast Between 2013 and 2018, the Conference Board of Canada predicts this industry will expand by six per cent.

educAtion services

Education Services - Contribution to GDP

Education Services - Percentage of GDP

155.0

160.0

165.0

170.0

175.0

180.0

185.0

2008 2009 2010 2011 2012 2013

Educational Services $ Millions (2007 chained dollars)

Source: nWT Bureau of Statistics and Conference Board of Canada

■■ Education ServicesSource: nWT Bureau of Statistics2013

GdP

32

Finance, real estate and insurance is a significant sector within the economy. It includes establishments primarily engaged in financial transactions or in facilitating financial transactions. It also includes renting, leasing or otherwise allowing the use of tangible or intangible assets. These establishments are primarily engaged in managing real estate for others. Selling, renting and/or buying of real estate for others and appraising real estate are also included.

Conference Board Forecast Between 2013 and 2018 the Conference Board of Canada predicts this industry will grow by approximately 11 per cent.

FinAnce, reAL estAte And insurAnce

Finance, Real Estate and Insurance - Contribution to GDP

Finance, Real Estate and Insurance - Percentage of GDP

410

415

420

425

430

435

440

445

450

455

460

2008 2009 2010 2011 2012 2013



Future growth looks positive, stimulated by growth in population associated with the development of new mines and businesses that support the mining industry. Currently, the industry accounts for around 13 per cent of total GDP.

■■ Finance, Real Estate & insuranceSource: nWT Bureau of Statistics 2013

GdP

33

FisHeries

Production from the commercial freshwater fish industry has been steadily declining since its peak in 2001/02 when it was valued at $1.5 million. In 2013/14 however, the industry experienced an increase in sales of 61 per cent over the previous year and was valued at $817,000.

The NWT supplies approximately one per cent of Canadian freshwater fish. Whitefish is commercially harvested from Great Slave Lake and makes up

81 per cent of the lake’s total harvest. Whitefish volumes have increased over recent lows.

Quality Canadian fish can command a premium price. For example, one Manitoba company ships packaged fillets from its Minnesota warehouse throughout North America. These fillets are high quality and immediately processed and frozen to ensure freshness. They are wrapped in plastic and shipped in dry ice.

These fish are sold in three, six, nine and 11 pound boxes. The price for an 11 pound box of fillets is $135 US plus shipping. This compares to the average price paid to fishers in the NWT of less than $1 Canadian per pound.

Commercial Freshwater Fish Harvest and Sales

‘000 LBs. HarvestedSales in ‘000 $

Source: Freshwater Fish Marketing Corporation

0

200

400

600

800

1,000

1,200

1,400

1,600

0

500

1,000

1,500

2,000

2,500

3,00020

00/0

1

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

Sales ($ 000's)

Harvest (000's Lbs)

34

Shutterstock

35

Fur

Trapping provides income and enables Aboriginal people to continue a lifestyle that has been a tradition in the north for thousands of years. Resource management is carried out in partnership with trappers, local

wildlife management boards and government. All harvesting is monitored and analyzed to ensure a healthy fur bearer population is sustained. Trapping occurs in the coldest months when fur is prime to ensure only

top quality pelts are marketed. Prime means that the fur has reached its maximum length, density, and texture.

As an internationally traded commodity, pelt values fluctuate

Annual NWT Fur Sales

Source: GnWT iTi

Take a Kid Trapping / TEaF iTi

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,00019

92-9

3

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

36

Lynx / Shutterstock

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,50019

92-9

319

93-9

419

94-9

519

95-9

619

96-9

719

97-9

819

98-9

919

99-0

020

00-0

120

01-0

220

02-0

320

03-0

420

04-0

520

05-0

620

06-0

720

07-0

820

08-0

920

09-1

020

10-1

120

11-1

220

12-1

3

Average Annual Income

due to supply (harvest) and demand. Demand is mainly driven by economic conditions and fashion. over the past five years, demand from emerging economies such as China and Russia has driven fur prices

higher. All fur bearing species are harvested in compliance with the International Agreement on Humane Trapping Standards. The NWT has implemented these standards and enforces the use of certified humane traps.

Wildlife resources are not only an important part of our northern ecosystems, they are also an essential part of the cultural and economic well-being of northern residents.

Average Annual Trapper Incomes

Source: GnWT iTi

37

This sector comprises establishments primarily engaged in providing health care, providing residential care for medical and social reasons, and providing social assistance such as counseling, welfare, child protection, community housing and food services. Sub-sectors include; ambulatory health care services, hospitals, nursing and residential care facilities and social assistance.

Conference Board Forecast The Conference Board of Canada has forecast that health care and social services will increase in value by approximately 10 per cent between 2013 and 2018.

Currently, health care and social services accounts for around seven per cent of total GDP in the NWT. The industry GDP contribution is expected to reach $262 million by 2018. Its share of total GDP is expected to remain around seven per cent of the NWT total.

Health Care and Social Services - Contribution to GDP

Health Care and Social Services - Percentage of GDP

210.0

215.0

220.0

225.0

230.0

235.0

240.0

2008 2009 2010 2011 2012 2013



HeALtH cAre And sociAL services

■■ Health Care and Social ServicesSource: nWT Bureau of Statistics

2013GdP

38

inFormAtion And cuLture

This sector comprises establishments primarily engaged in producing and distributing (except by wholesale and retail methods) information and cultural products. Establishments providing the means to transmit or distribute these products or providing access to equipment and expertise for processing data are also included.

The unique characteristics of information and cultural products, and of the processes involved in their production and distribution, distinguish this sector from the goods-producing and services-producing sectors.

Conference Board Forecast The Conference Board of Canada forecasts that the information and culture industry will increase by approximately eight per cent between 2013 and 2018.

Information and Culture - Contribution to GDP


74.0

76.0

78.0

80.0

82.0

84.0

86.0

88.0

90.0

2008 2009 2010 2011 2012 2013



The information and culture industry accounts for approximately three per cent of the NWT’s GDP.

■■ information and CultureSource: nWT Bureau of Statistics

Information and Culture - Percentage of GDP

2013GdP

39

Film in the Northwest TerritoriesThe NWT Film Commission has its own website along with incentive programs to promote local productions in film and media. Film, video, and digital media are the centre of a growing and dynamic industry in the NWT. Participation from local residents and businesses is increasing and there are a number of projects currently in production. Experienced television and film professionals are also available to offer services and expertise to visiting production companies.

While statistics on the NWT film industry are limited, the Information and cultural industries contribute close to $90 million to GDP annually. Film productions alone contribute over $5 million in wages and over 100 people are employed full time in the film and media arts.

40

The NWT is a major producer of high quality, and high value diamonds. There are currently three producing diamond mines with a fourth expected to enter into production in 2017.

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Non-metal Mining

Diamond Mining - Contribution to GDP

Source: nWT Bureau of Statistics and Conference Board of Canada ‘s Territorial Outlook Spring 2014

mininG

Mineral exploration expenditures are expected to continue to decline in 2014, to $72 million from $90 million in 2013. The potential of the NWT is vast, and largely unexplored.

Mineral Exploration and Deposit Expenditures

Source: natural Resources Canada

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014

$ Millions



41

Diamonds - Changes in NWT Prices and Production

Source: Sead.nrcan.gc.ca/prod-prod/ann-ann-eng.aspx (p = preliminary)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

$-

$50

$100

$150

$200

$250

2008 2009 2010 2011 2012 2013(p)

Price per Carat

000s of Carats

‘000’s of carats$ per Carat

Average prices for NWT diamonds declined over 2008/09 in parallel with the world economic downturn. Prices recovered the following year, reaching a new high in 2011. This was short lived; as prices declined through 2012 and 2013.

However, price declines did not impact sales as much as decreasing production. Between 2008 and 2013, annual production declined from 13.7 million carats to 9.9 million carats.

Diamond Mining - Percentage of GDP

Currently, diamond mining accounts for around 16 per cent of the NWT’s GDP. Looking forward to 2018, diamond mining is projected to increase significantly in importance with its share growing to 31 per cent by 2018.

■■ Diamond MiningSource: nWT Bureau of Statistics

2013GdP

42

The projections for 2013 to 2018 are provided by the Conference Board of Canada. The projections include significant growth for metal mining. As many as five new mines have the potential to enter production by the end of the decade.

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Metal Mining

Metal Mining - Contribution to GDP


In its projections for the NWT, the Conference Board assumes “most metal ore prices are expected to remain high when compared to where they have been for most of the past 20 years, and many of the proposed mining projects are still viable under current economic and pricing conditions. Three new metal ore mining projects were included in this forecast. as a result, the mining sector is projected to experience robust growth.

Production at the Cantung tungsten mine, nWT’s only metal-producing mine, rose in fiscal 2013. The owners continue to invest in capital improvements aimed at boosting production during the upcoming year and extending the mine life to 2015.

Canadian Zinc’s Prairie Creek project will likely be the next new metal mine to operate in the territory, producing zinc, silver, and lead. The owners have had all the permits needed to advance the project in their hands since last fall. This year, the company is undertaking optimization, geotechnical and

metallurgical studies in order to reduce initial development and operating costs and shorten the development schedule. The company is beginning procurement and site engineering, and it expects to begin construction of the access road and site preparation and other start-up activities this summer. With a relatively small capital development budget of $193 million (including a $33 million contingency), the project is expected to be in production in 2016.

Fortune Minerals hopes to start developing the niCO mine in 2014 and begin production in late 2016 or early 2017. The company received an interim land use permit this year to conduct site preparation, in anticipation of construction of the project.

The third new metal mine project included in the forecast is avalon’s nechalacho rare earth project. it is one of the world’s largest undeveloped heavy rare earth elements (REE) projects.”

Source: Conference Board of Canada

Resurgence of Metal Mining

$ Millions (2007 chained dollars) Conference Board Forecast

43

oiL And GAs

Beaufort Oil Gas

Gas Anchor Fields

Colville Lake Gas

Diamond Mines

Courageous Gold

NICOSahtu Exploration

Drake Point Oil

Prairie Creek

BC and Liard Gas Natural Gas

Avalon REE

Mactung

Selwyn

Cantung

Amauligak

Norman Wells Oil

Transport/Supply

Oil

Natural Gas

Diamonds

Gold

Base Metals

NWT Resources

44

Oil and Gas - Percentage of GDP

The oil and gas industry comprises establishments primarily engaged in the exploration for, and/or production of, petroleum or natural gas from wells in which the hydrocarbons will initially flow or can be produced using normal pumping techniques.

Conference Board Forecast oil and gas exploration will likely gain momentum over the next decade. However, exploration activity shows up in other industries; oil and gas only measures production. Between 2013 and 2018 the Conference Board of Canada predicts that oil and gas will decrease as existing exports from Norman Wells are depleted.

The Conference Board of Canada projections shown above assumes that no new wells will be developed in the NWT. Mineral fuels account for approximately nine per cent of the NWT’s GDP, but as existing wells and infrastructure ages, its share is expected to decline.

0.0

100.0

200.0

300.0

400.0

500.0

600.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mineral Fuels

Oil and Gas - Contribution to GDP


■■ Oil and GasSource: nWT Bureau of Statistics

2013GdP



45

Oil and Gas BasinsThe NWT has huge oil and gas potential. Most of the NWT is located within the Western Canada Sedimentary Basin and the Arctic Sedimentary Basin, and these areas are under explored. The map to the left depicts the Canadian sedimentary basins and the NWT borders.

Oil and Gas - Positive Outlook ConocoPhillips Canada Resources Corporation (ConocoPhillips) announced in June 2012 that it intended to undertake a three-year study to evaluate if commercial development of the Amauligak field (estimated to contain up to 250 million barrels of oil and 1.5 trillion cubic feet of natural gas) is possible and if so, to identify an appropriate development concept.

The outcome of the study may lead to additional phases in the project planning process. A decision on whether to move to the next planning phase could be made by the end of 2014. Subject to the successful conclusion of all phases and regulatory approvals, construction could begin between 2019 and 2022 and production could occur between 2022 and 2025. Amauligak is the largest oil and gas field in the Mackenzie Delta and Beaufort Sea areas. It lies approximately 31 miles offshore in shallow water. During 2013, ConocoPhillips conducted consultation sessions with appropriate governments, regulatory agencies and communities. ConocoPhillips has undertaken another round of consultations with Delta communities.

46

This sector includes establishments primarily engaged in activities in which human capital is the major input. The main components include legal services, accounting, architectural, engineering and related services industries, surveying and mapping services, design services, management, scientific and technical consulting, scientific research and development and advertising services.

Conference Board Forecast There is significant opportunity to expand this industry within the NWT as $252 million in professional services are imported from other regions of Canada.

Conference Board of Canada expects professional, scientific and technical services is expected to grow by 16 per cent between 2013 and 2018.

Professional, scientific and technical services contributed approximately three per cent of the GDP in 2012.

Professional, Scientific and Technical Services - GDP Contribution

ProFessionAL, scientiFic & tecHnicAL services

Professional, Scientific and Technical Services - GDP Contribution

82.0

84.0

86.0

88.0

90.0

92.0

94.0

96.0

98.0

100.0

2008 2009 2010 2011 2012 2013


■■ Professional, Scientific and Technical ServicesSource: nWT Bureau of Statistics


2013GdP

47

This sector involves government institutions. The sub-sectors included in this industry are federal government public administration and territorial public administration, local, municipal and regional public administration, and Aboriginal public administration.

Forecast Devolution and self government will likely stimulate significant growth within the industry.

PubLic AdministrAtion & deFence

Public Administration and Defence - Contribution to GDP

Public Administration and Defence - Contribution to GDP


480.0

490.0

500.0

510.0

520.0

530.0

540.0

550.0

2008 2009 2010 2011 2012 2013

Public administration and defence accounts for over 16 per cent of the NWT’s GDP. While industry activity is expected to increase, its overall share is expected to decrease in relation to new mineral development, dropping to 13 per cent in 2018.

■■ Public administration and Defence ServicesSource: nWT Bureau of Statistics

2013GdP


48

The future of retail trade is linked to growth in household incomes, which in turn depends on employment growth, especially in the resource industry.

This sector comprises establishments primarily engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.

Conference Board Outlook According to the Conference Board of Canada’s forecast, between 2013 and 2018 we can expect 25 per cent growth in retail trade,

Retail Trade - Contribution to GDP

retAiL trAde

Retail Trade - Percentage of GDP

165.0

170.0

175.0

180.0

185.0

190.0

2008 2009 2010 2011 2012 2013

Retail trade currently accounts for five per cent of GDP. Projections by the Conference Board of Canada indicate retail trade will keep pace with the increased level of economic growth. It is expected industry growth will be stimulated by new mines and their impact on family income, employment and population growth.

■■ Retail TradeSource: nWT Bureau of Statistics


2013GdP


49

Tourism is the largest renewable resource based industry in the NWT. Within the economy, it is considered an export as it brings new dollars into the NWT and generates employment for many northerners. The travel and tourism industry is competitive, and can be affected by economic global downturns.

Through the delivery of ITI’s tourism support programs, significant progress has been

made in developing tourism skills, improving research, building public and private tourism infrastructure, creating new NWT tourism products and expanding recognition of the NWT as a travel destination.

Travelers come to the NWT for a variety of reasons, but typically fall into one of seven segments; Aurora Viewing, outdoor Adventure, Fishing, Hunting, General Touring, Visiting Friends

and Relatives and Business Travel. Since May 2009, Air Canada, Canadian North, First Air and WestJet have provided regular flights from Yellowknife to Edmonton. The introduction of a new Air North direct connection to ottawa and Whitehorse offers opportunities to expand market access in both ontario and the Yukon.

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2008/09 2009/10 2010/11 2011/12 2012/13

Main Purpose of Travel 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

Aurora Viewing 7,000 7,297 5,460 5,400 6,776 11,368 15,721 Fishing 7,726 7,470 7,274 6,403 4,956 4,692 3,975 General Touring 13,340 15,123 14,760 14,500 12,920 13,441 15,226 Hunting 1,216 984 942 757 436 478 502 Outdoor Adventure 2,079 2,125 2,098 1,853 1,910 2,320 3,085 Visiting Friends & Relatives 9,025 11,693 9,261 12,910 13,403 11,847 13,811 Total Leisure Visitors 40,386 44,692 39,795 41,823 40,401 44,146 52,319 Business Travel 35,509 34,880 33,624 26,181 24,795 24,272 24,092

Total Visitors 75,895 79,572 73,419 68,004 65,196 68,418 76,411

Tourism Visitors by Segment

Source: GnWT iTi

Aurora Visitors

Source: GnWT iTi

tourism

50

Top: Dehcho / ShutterstockBottom left: Float Plane / ShutterstockBottom right: Sahtu Park / Mark Patrick

51

Transportation and warehousing is a large industry within the NWT, accounting for seven per cent of total GDP. This sector comprises establishments primarily engaged in transporting passengers and goods, warehousing and storing goods, and providing services to these establishments. The modes of transportation are road (trucking, transit and ground passenger), rail, water, air and pipeline. Post offices and courier establishments are also included in this sector.


Between 2013 and 2018 the Conference Board of Canada predicts that transportation & warehousing will increase by around 25 per cent.

trAnsPortAtion And WAreHousinG

Transportation and Warehousing - Contribution to GDP

Transportation and Warehousing - Percentage of GDP


205.0

210.0

215.0

220.0

225.0

230.0

235.0

240.0

245.0

2008 2009 2010 2011 2012 2013

Transportation and warehousing accounts for around six per cent of the NWT’s GDP, and is critical for the supply of other sectors within the economy.

■■ Transportation and WarehousingSource: nWT Bureau of Statistics

2013GdP


52

Top: iTi Bill BradenBottom left: iTi Bill BradenBottom right: Hay River Mall / Dan Westman

53

This sector comprises establishments primarily engaged in wholesaling merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.

The wholesaling process is an intermediate step in the distribution of goods. Many wholesalers are organized to sell merchandise in large quantities to retailers, and business and institutional clients. However, some wholesalers, in particular those that supply non-consumer capital goods, sell merchandise in single units to final users.

Conference Board Forecast According to the Conference Board of Canada, wholesale trade is expected to grow 24 per cent between 2013 and 2018.

WHoLesALe trAde

Wholesale Trade - Contribution to GDP

Wholesale Trade - Percentage of GDP

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2008 2009 2010 2011 2012 2013

Wholesale trade accounts for around three per cent of the NWT’s GDP, but with the development of new mineral projects and projected population growth, its share is expected to increase.

■■ Wholesale TradeSource: nWT Bureau of Statistics


Total GDP

Wholesale Trade2013GdP


54

iTi Bill Braden

55

Documents

Economic OutlOOk 2014-15 · Economic OutlOOk 2014-15 ... The territory’s existing mining operations—which include a tungsten mine, ... other factors favouring improved economic